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The Forum > Article Comments > Value adding in Australia - the beginning of the end? > Comments

Value adding in Australia - the beginning of the end? : Comments

By Viv Forbes, published 24/5/2011

Xstrata's abandonment of smelting in Mt Isa shows where Australia is heading under a carbon tax.

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Xstrata themselves said that they were closing their copper smelting operations because the Chinese had starting their own smelting operations. Lower wages in China had made the operations here uncompetitive. The impending carbon tax had nothing to do with it. It was just simple economics of the business going where the expertise is the same and the costs are lower. It's basically the same thing that happened to the steel industry.
It's hysterical to claim that anyone 'hates' these industries. The debate has been about how can we transition to a more environentally sustainable future while easing the transition for individuals, companies and the economy as a whole. The addition of green technologies (new technologies where we can potentially have a competitve advantage in expertise) will add to the economic base of the country in the longer term, not detract from it.
Posted by Raptor, Tuesday, 24 May 2011 9:28:44 AM
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Not only Mt Isa but copper and uranium concentrate from SA's Olympic Dam will be sent to China. This 'value subtracting' not only denies jobs and profits to Australia but gives other countries control over our resources. Since China and India increasingly depend on Australian coal and LNG we are providing the wherewithal. Other countries merely supply cheap labour and lack of pollution controls.

One measure I think would be to carbon tax coal and LNG exports unless the importing country has a comparable system. That might be say $50 on a tonne of thermal coal and $25 on a tonne of LNG. In addition when the copper, iron or uranium is re-imported an extra carbon tariff is slapped on the goods. The case of the Malaysian rare earths plant is a bit different as they have cheap hydro not coal. Overseas mineral processing costs Australia jobs and lowers pollution standards.
Posted by Taswegian, Tuesday, 24 May 2011 9:58:24 AM
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There are pieces of wisdom in both Viv Forbesí piece and the comments so far. Yes, mining companies are in the best position to make commercial decisions about where they mine and process their resources, and that includes value-adding. Yes, there is a good deal of anti-mining sentiment in Australia and itís anyoneís guess as to what would happen if government were dominated by green views.

On the other hand, Raptorís dreamtime of profitable green industries created in response to the departure of mineral activities is just wishful thinking.

The real problem is that the main point has been missed. We are now in an era where it is the global implications of these kinds of decisions that matter. In this particular case the question in its simplest form becomes, where are the best places, with the lowest emissions, to make the 20 million tonnes of copper that the world needs? Of course, no single nation or business can ever answer that accurately. Even a planned global economy couldnít answer it. But normal commercial market-based decision-making will give the optimal answer, so long as the playing field is level. And for minimising emissions that means a uniform global carbon price or some equivalent mechanism.

I admit my own dreamtime element to that solution. The world wonít be getting uniformity any time soon. But there is one clear conclusion. If Australia wants to lead the world in carbon pricing (yes, there are schemes elsewhere but they are toys) then commercial decisions are going to be made that are bad for Australia and may well be bad for the planet. Lose-lose is definitely not the way to go
Posted by Tombee, Tuesday, 24 May 2011 10:14:17 AM
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I'm beginning to think there is a prolonged economic cycle in a nation's history, which goes like this:

1. Relative poverty -- people realise they have to work hard and make rational decisions.

2. Hard work and rational decisions pay off with increased wealth and security.

3. After prolonged wealth and security, people lose sight of the link between prosperity and rational decisions.

4. Rational decisions come to an end and the nation heads back down towards poverty again.

As a humanitarian, I think it's great that we're giving the Chinese and Indians a chance at the profits to be made from mining. As an Australian resident, though...
Posted by Jon J, Tuesday, 24 May 2011 10:56:39 AM
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These things were happening well before any Carbon taxed was thought up. Linking the two is just plain dumb. The problem is our short term thinking that we have suffered for a long time in Australia. We have no nation building vision anymore, and I see no way of getting it back.

I live is SA the last time we had any sort of vision was in Tom Playfords day, we will never see a Polly like that in Australia.
We have carer Polly now who don't believe in anything, taught in lawyer school is argue whatever side of the argument is required with equal false conviction.
Our news papers and TVís are full over opinion writers now who are even worst, just a bunch of contrarians.
Posted by Kenny, Tuesday, 24 May 2011 12:34:11 PM
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Some commenters, whether they be alarmists or locusts or whatever, are glad to point out that a carbon tax is not to blame for Xstrata's decision to close down its copper smelting and refining in Australia, even though Xstrata would have been influenced undoubtedly by its threatened imposition.

It would be interesting to see how they think that imposition of a carbon tax would improve the lot of miners, manufacturers, farmers -- in fact any business other than the financiers and inefficient renewable energy producers who stand to benefit from a carbon tax.

Sadly, Australians have to get used to having their standard of living reduced, as a consequence of being governed by very short-sighted leaders who are so misinformed that they see nothing wrong with a carbon tax -- thanks to their gullibility by failing to appreciate that there is no compelling scientific evidence that carbon dioxide emissions cause any measurable climate change.
Posted by Raycom, Tuesday, 24 May 2011 5:57:20 PM
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